2016 (7) TMI 303 - AT - Service Tax

Levy of penalty - Non payment of service tax at the time of filing of the ST-3 returns - The amount was paid subsequent to filing of service tax returns but before the issuance of the Show cause notice. - Held that - the entire service tax and interest has been discharged by the appellant assesse before issuance of Show cause notice. - Levy of penalty waived invoking the provisions of Section 80 - Decided in favor of assessee.

Summary

Issues involved:
Penalty imposition for delayed service tax payment.

Analysis:
The case involved a dispute regarding the imposition of a penalty on the appellant for delayed payment of service tax. The appellant, engaged in "Man Power Recruitment" services, had filed service tax returns but failed to pay the tax at the time of filing. The total service tax amount of ?26,95,422/- was paid after filing the returns but before the issuance of the Show Cause Notice, along with the interest liability of ?4,97,056/-. The Additional Commissioner imposed a penalty under Section 76 of the Finance Act, 1994. The Commissioner (Appeals) upheld the penalty, leading to the present appeal.

The appellant argued financial hardship as the reason for the delayed tax payment, highlighting that the entire tax amount and interest were paid subsequently without disputing the liability. The appellant contended that the penalty imposition was unwarranted and should be set aside.

On the other hand, the department argued that the appellant collected service tax but failed to deposit it on time, violating the relevant provisions. The department emphasized that filing ST-3 Returns on time was insufficient if the tax dues were paid later. As the interest was not paid before the Show Cause Notice issuance, the department maintained that the penalty was rightly imposed.

After hearing both sides, the issue centered on the penalty imposed on the appellant for the service tax liability. The judicial member noted that the appellant had cleared the entire service tax and interest before the Show Cause Notice was issued. Invoking Section 80, the penalty imposed by the adjudicating authority was set aside, and the appeal was allowed accordingly. The judgment was pronounced on 26.04.16.